Google invests an estimated US$14 million in a Metronet in Kampala to open up the market

Google has a global ambition to get Internet access available more widely (see Brett St Clair video link on access at the bottom of this story). This week it announced the launch of a Metronet in Kampala designed to open up the market. Russell Southwood spoke to Google’s Access Field Director, Kai Wulff about what it’s setting out to achieve.

Google has been looking at the supply chain in Sub-Saharan Africa and wanting to find a way of intervening that would break down market blockages and ultimately reduce retail prices for users. However, it’s always been very clear that it did not want to get into direct provision of retail bandwidth:”We wanted to do something where we put our money where our mouth was that could really influence the ecosystem of the Internet.”

So why did they choose Uganda and Kampala in particular?:”We wanted to start somewhere where other problems had been sorted. Uganda has an international fibre connection and vibrant competition and I have to express my own bias. I love Kampala.”

Google will probably invest somewhere between US$12-14 million in a 6-700 kilometre fibre Metronet that covers most of Greater Kampala, stretching from Entebbe towards Jinja across one axis.

“The aim is to connect every building or base station ISPs or operators want to get to. The number of kilometres laid increases every day as we keep extending the network.” The network is being built by a local sub-contractor and supervised by a regional partner familiar with building fibre networks.

The network is being operated by a 100% Google owned subsidiary that is either selling capacity or dark fibre:” We want to be profitable but we are not extracting the most we could out of the asset.” The capacity offer is very different from buying by the Mbps. You buy a connection and according to Wulff, the amount of capacity on that connection will grow as the customer’s demand grows but there will be no extra payment. Also, the connections provide uncontended wholesale capacity.

That said, Google is being a little cagey about the exact price of the connection port:”I can say that it is substantially cheaper than doing it on a cheap microwave network and we expect it to go lower. It’s important to understand it’s not a retail play. It’s a high capacity Metronet network designed to ensure that CAPEX is not an issue for Internet providers.” It says that it has sold thousands of connection ports, some where Google is providing the connection equipment and others where it is dark fibre. The clients for the network are a mixture of new entrants, existing large operators and ISPs.

But isn’t this competing directly with things like MTN’s own Metronet?:”Our proposition is totally different. We’re only selling to other operators and we try and avoid unnecessary duplication. We look at how we can achieve synergy with other networks. Where we can, we make use of existing infrastructure that is available at the right cost and quality.”

So will we see Google building more of these kinds of Metronets?:”We’re very busy with the project here in Kampala and we have to prove it first. Also there are different groups in Google looking at other forms of access.”

From our own work on Internet value chains last year, it is clear that three significant market blockages remain, even in very liberalised countries: local access (including metronets), national access and quite often transit access for landlocked countries. It will be interesting to see whether Google’s Metronet in Kampala delivers the magic combination of both faster and cheaper bandwidth for end-users.